Regulatory disincentives and DSM
- Oak Ridge National Lab., TN (United States)
Utility demand-side management (DSM) programs that improve customer energy efficiency create tension between customer and utility shareholder interests. Customers want the benefits of greater efficiency (lower utility bills and improved productivity), while shareholders want the greater earnings from higher electricity sales. This conflict can be a major stumbling block to utility implementation of what would otherwise be its [open quotes]least-cost[close quotes] resource plan. State regulation to encourage utility investment in energy efficiency requires three elements: Utility recovery of the costs to run DSM programs; Recovery of the net lost revenue caused by the energy and demand reductions attributed to the utility's DSM programs; A financial incentive to encourage the utility to run DSM programs that capture as much of the cost-effective resource as possible. While all three components deserve attention, the lost-revenue component is often the most important. It is critical both because allowing a utility to recovery lost revenues is required to level the playing field between demand and supply resources, and because it usually represents the largest dollar amount.
- OSTI ID:
- 6926413
- Journal Information:
- Fortnightly; (United States), Journal Name: Fortnightly; (United States) Vol. 132:13; ISSN FRTNE8
- Country of Publication:
- United States
- Language:
- English
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